2018 (8) TMI 264 - AT - Income Tax

Denial of exemption u/s.11 - proof of charitable activities - activities of the assessee-trust are for advancement and development for the benefit of its members and public - Held that - Considering that the activities of the assessee-trust are for advancement and development for the benefit of its members and public, the art, science, technology and engineering of plastics, natural and synthetic and other related materials which is achieved through regular technical lectures, seminars and workshop on topical interest, and international conference held in India by inviting foreign delegates and faculties, conducting one-year part-time Diploma Courses, conducting Plastics Processing Operators Training (PPOT) in 100 Govt. Industrial Training Institutes (ITI) all over India, conducting two-day short-term courses and publishing IPI Journals giving latest technological developments. Assessee trust it is not carrying on any activity which can be termed as commercial activity or an activity in the nature of trade, commerce or business by conducting an International Conference. The assessee is disseminating knowledge on the subject of plastics by different ways and means like holding courses, holding conferences, holding lectures, publishing literature on new subjects, publishing its journal, conducting diploma course, etc. Thus the activities of the assessee are purely of a general public utility inasmuch as it helps all those classes of persons connected with the plastics and its application with a useful knowledge and information from time to time. Accordingly, we do not find any merit in the action of the lower authorities for decline of claim of exemption in respect of excess of income over the expenditure which was transferred to the education fund. - Decided in favour of assessee

Summary

Issues Involved:
1. Denial of exemption u/s.11
2. Not dealing with the issue regarding mutuality

Analysis:
1. Denial of exemption u/s.11:
The appellant contested the denial of exemption u/s.11 by the Assistant Director of Income Tax (E)-II(l), Mumbai, which was confirmed by the Commissioner of Income Tax (Appeals) - 1, Mumbai (CIT(A)). The CIT(A) held that the receipts of the appellant did not qualify as falling under the definition of education or any other object of general public utility. Additionally, it was determined that the receipts were considered as business income. The appellant argued that all conditions for exemption u/s.11 were fulfilled, and the denial was not in accordance with the law. The Tribunal, after considering the activities of the assessee-trust related to the advancement and development of plastics technology, concluded that the appellant was not engaged in commercial activities but was disseminating knowledge for the benefit of its members and the public. The Tribunal found no merit in the lower authorities' decision to decline the exemption claim, as the activities were deemed to be of general public utility. Consequently, the appeal of the assessee was allowed.

2. Not dealing with the issue regarding mutuality:
The appellant raised an alternative contention regarding the principles of mutuality, which the CIT(A) failed to address. The appellant argued that if exemption u/s.11 was not applicable, the income should be exempt based on the principle of mutuality. However, the judgment did not explicitly address this issue, as the Tribunal primarily focused on the denial of exemption u/s.11 and the nature of the appellant's activities. Despite the lack of specific discussion on the mutuality aspect, the Tribunal's decision to allow the appeal based on the activities being of general public utility indirectly addressed the issue by determining that the appellant's activities were not commercial in nature.

In conclusion, the Tribunal overturned the denial of exemption u/s.11 and allowed the appeal of the assessee, emphasizing that the appellant's activities were beneficial for the advancement and development of plastics technology and were not considered commercial activities. The judgment highlighted the importance of activities being of general public utility to qualify for exemption under relevant provisions of the Income-tax Act.